The Toronto Marlies was founded in 2005 when the Toronto Maple Leafs relocated the St. John's Maple Leafs to Toronto, ON. Despite the Leafs popularity in Newfoundland, Maple Leaf Sports & Entertainment (MLSE), the owner of the Toronto Maple Leafs and the St. John's Maple Leafs, opted relocate its AHL franchise to Toronto.

The Toronto Maple Leafs management indicated that reason for the relocation was based on geography. When the Newmarket Saints relocated to St. John's, NL, in the early 1990s the AHL thrived in Atlantic Canada with teams in Fredection, NB,
Halifax, NS, Moncton, NB and Sydney, NS. By 2003 all the other franchises had either relocated or ceased operations, leaving the St. John's Maple Leafs some 900 miles (1450km) away from the closest AHL team in Portland, ME. The long distance travel was seen as detrimental to player development.

A window of opportunity to move the franchise opened up when the Edmonton Oilers AHL affiliate
Toronto Roadrunners relocated from Toronto to Edmonton, AB, in 2004 and left the city owned Ricoh Coliseum without a tenant. On July 1, 2005 MLSE leased the arena from the city and moved its AHL franchise to Toronto for the 2005-06 season.

The team was named Toronto Marlies in reference to a former team known as the Toronto Marlboros that once operated as a developmental affiliate of the Maple Leafs. That team was founded as the Toronto Marlborough Athletic Club, but was commonly known as the Toronto Marlboros. The team took its name from the 9th Duke of Marlborough, Charles Spencer-Churchill, an to uncle of Sir Winston Churchill, a former Prime Minister of the United Kingdom of Great Britain and Northern Ireland.

The Marlies play in uniforms that are nearly identical to the uniforms worn by the Toronto Maple Leafs. The team has used the Toronto Marlboros logo as a secondary logo on special third jerseys, paying tribute to the former team.